Brent crude falls 1% on renewed supplies from Libya; weak sanctions on Russia

Photo: The Canadian Press. All rights reserved.

An oil pump works at sunset in the desert oil fields of Sakhir, Bahrain, Jan. 22, 2013. THE CANADIAN PRESS/AP, Hasan Jamali

The price of U.S. oil inched slightly higher Monday but global oil fell more than one per cent on expectations of increased exports from Libya.

Benchmark West Texas Intermediate crude for June delivery rose 24 cents to close at US$100.84 a barrel on the New York Mercantile Exchange. Brent crude, an international benchmark used to price oil used by many U.S. refineries, fell $1.46, or 1.3 per cent, to close at US$108.12 in London.

Brent fell on news that Libya would soon resume exports from a 70,000 barrel-per-day terminal that had been occupied by rebels. Libya has struggled to deliver steady oil exports in the three years since the ouster of former leader Moammar Gadhafi. Libya's exports are roughly 220,000 barrels a day, down from 1.4 million barrels a day a year ago.

Energy analyst Jim Ritterbusch said in a research note Monday that U.S. and European sanctions against Russia over its involvement in the turmoil in Ukraine appeared to be less strict that oil traders had expected, further pushing oil prices down.

Still, analysts say prices remained higher than they would otherwise be because of fears that sanctions against Russia would disrupt supplies of that country's oil and gas. Global supplies are ample, and demand growth is weak.

"Growth in demand is so far unable to match, let alone outpace, the increasing oil supply," said Fawad Razaqzada of Forex.com in London.

In other energy futures trading on the Nymex, wholesale gasoline fell four cents to close at US$2.986 a U.S. gallon (3.79 litres), heating oil fell 3.6 cents to close at US$2.945 a gallon and natural gas rose 14 cents to close at US$4.79 per 1,000 cubic feet.

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